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OK, some people in Aussie #FinServ are clearly unsettled by Vanguard's decision to boldly have a crack (again) at #superannuation.
So I'm gonna break it down in this thread.
I may be on the money, or way off base. You decide.
So I'm gonna break it down in this thread.
I may be on the money, or way off base. You decide.
It's important to note that @vanguard_au was its first presence outside the US.
From memory, around 1995-96.
So this hasn't exactly been an overnight success story.
For much of the first two decades, & paying $0 commissions, it was broadly shunned by #financialplanning.
From memory, around 1995-96.
So this hasn't exactly been an overnight success story.
For much of the first two decades, & paying $0 commissions, it was broadly shunned by #financialplanning.
The prize that lured Vanguard to Australia was #superannuation.
But the cost of client acquisition for retail is high.
Funds without a dedicated salesforce (or default status) struggle.
Plum, the corp super JV with MLC, was a bit meh for market penetration.
But the cost of client acquisition for retail is high.
Funds without a dedicated salesforce (or default status) struggle.
Plum, the corp super JV with MLC, was a bit meh for market penetration.
So the pragmatic pivot for Vanguard Aust was to manage Insto mandates for other super funds.
And to chip away at retail super via non-aligned Financial Planners.
The fillip starts in 2009-10 with two key inquiries; Rippoll into #financialadvice & Cooper into #superannuation.
And to chip away at retail super via non-aligned Financial Planners.
The fillip starts in 2009-10 with two key inquiries; Rippoll into #financialadvice & Cooper into #superannuation.
1 July 2013 and upfront + trailing commission for new advice clients goes the way of the Dodo & a statutory Best Interest Duty arises.
Not long after the first of the MySuper funds is up & running; broadly-diversified and *low cost*.
Vanguard's happy hunting ground.
Not long after the first of the MySuper funds is up & running; broadly-diversified and *low cost*.
Vanguard's happy hunting ground.
As Jeff Bezos said, "Your margin is my opportunity".
And there is a *lot* of fat in the #superannuation industry.
How much? Well...
And there is a *lot* of fat in the #superannuation industry.
How much? Well...
And across asset classes, the story is little different.
Super fund CIOs may say Aussie #investmentmanagement fees for listed assets are competitive, but detailed 2017 Prod Comm analysis revealed otherwise.
Lowering the cost of managing listed assets is Vanguard's jam.
Super fund CIOs may say Aussie #investmentmanagement fees for listed assets are competitive, but detailed 2017 Prod Comm analysis revealed otherwise.
Lowering the cost of managing listed assets is Vanguard's jam.
And as I outlined in this recent piece for @MichaelWestBiz, investment & admin fees for #superannuation are in excess of $30bn per annum now. https://www.michaelwest.com.au/snouts-in-the-superannuation-trough-turbo-charging-paul-keatings-legacy/
A fact that Treasurer Frydenberg also alluded to in his Your Future, Your Super announcement in #Budget2021.
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/your-future-your-super-making-your-super-work-harder
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/your-future-your-super-making-your-super-work-harder
So why are super execs, retail & not-for-profit, sweating the announcement of Vanguard Australia returning all mandates back to Insto funds as it looks to launch its own retail #superannuation fund in Australia?
Three words: 'The Vanguard Effect'.
Source: @EricBalchunas
Three words: 'The Vanguard Effect'.
Source: @EricBalchunas
The move to return what's suggested to be up to $100bn in insto mandates might seem like insanity, until you realise that it's probably $20m in headline revenue tops.
Vanguard has far bigger ambitions. And its moves in China provide a clue. https://www.pionline.com/money-management/vanguard-returns-21-billion-assets-china-state-funds
Vanguard has far bigger ambitions. And its moves in China provide a clue. https://www.pionline.com/money-management/vanguard-returns-21-billion-assets-china-state-funds
In short, Vanguard is going after retail #superannuation.
Makes sense. Big 4 banks effectively out.
AMP, IOOF, Macquarie + Platforms the only real competition. Oh, and of course Industry Funds.
Which is where this gets weird.
Vanguard needs Fin Planners on-board.
Makes sense. Big 4 banks effectively out.
AMP, IOOF, Macquarie + Platforms the only real competition. Oh, and of course Industry Funds.
Which is where this gets weird.
Vanguard needs Fin Planners on-board.
So Vanguard's PR messaging seems to walk a fine line between empowering individuals & helping Advisers deliver better #superannuation to more people.
Each way bet? Possible.
No other reason to keep flogging the 'Adviser Alpha' message which is, um, not empirically that robust.
Each way bet? Possible.
No other reason to keep flogging the 'Adviser Alpha' message which is, um, not empirically that robust.
Where to from here?
A retail Vanguard #superannuation fund? Yes.
Lower fees for other funds? Very likely.
And Frydenberg's proposed annual performance checks for funds could not have been better timed for Vanguard Aust.
The next 3+ years will be interesting to say the least.
A retail Vanguard #superannuation fund? Yes.
Lower fees for other funds? Very likely.
And Frydenberg's proposed annual performance checks for funds could not have been better timed for Vanguard Aust.
The next 3+ years will be interesting to say the least.
